Measuring the Gains from Medical ResearchAn Economic Approach

Measuring the Gains from Medical ResearchAn Economic Approach

Kevin M. Murphy and Robert H. Topel

Print publication date: 2013

ISBN: 9780226551784

Publisher: University of Chicago Press

Abstract

In 1998, health expenditures in the United States accounted for 12.9 percent of national income—the highest share of income devoted to health in the developed world. The United States also spends more on medical research than any other country—in 2000, the federal government dedicated $18.4 billion to it, compared with only $3.7 billion for the entire European Union. In this book, health economists ask whether we are getting our money's worth. From an economic perspective, they find, the answer is a resounding “yes”: in fact, considering the extraordinary value of improvements to health, we may even be spending too little on medical research. The evidence these chapters present and the conclusions they reach are surprising: that growth in longevity since 1950 has been as valuable as growth in all other forms of consumption combined; that medical advances producing 10 percent reductions in mortality from cancer and heart disease alone would add roughly $10 trillion—a year's GDP—to the national wealth; and that the average new drug approved by the FDA yields benefits worth many times its cost of development. The chapters in this book are packed with these and many other revelations, their analysis demonstrating the massive economic benefits we can gain from investments in medical research.